Transcript: Sens. Chuck Schumer and John Cornyn

May 31, 2009

Page 10 of 16

And George, the president has said -- you saw the contradictions
there. He wants to get out of the business as quickly as possible.
He also wants to urge the auto industry to move in the direction that
he thinks is good for the country. And as of tomorrow, most likely or
in a couple of months, once it's all completed, the United States
government, along with Canada, will be a 70 percent owner of General
Motors.

WILL: Yes. $20 billion in so far, perhaps $50 billion more to
come. The president will be long into collecting Social Security
before General Motors pays all this back, if it ever does, which I
sincerely doubt.

Why are we doing this? We're doing this because it is too big to
fail. First, big. Harley-Davidson has a market capitalization eight
times larger than that of General Motors. In what sense is it big
anymore?

Fail? A year ago, in the second quarter of 2008, it was losing
$118,000 a minute. It has failed. The question is what you do about
it. It seems to me the point of capitalism, which is a profit and
loss system, is to clear away things like Chrysler and General Motors.

STEPHANOPOULOS: The White House would argue that they had to
step in, because even though the numbers you cite are correct, they
would say if GM goes into liquidation, 65,000 jobs lost immediately,
hundreds of thousands of jobs lost in collateral damage.

WILL: That's partly assuming, partly assuming that Americans
would stop buying American cars. They'd buy different cars, made in
America, most of them, using American parts mostly, sold to America.

KRUGMAN: OK. I think it's kind of telling that you're talking
about market cap. Of course, workers, not, you know, GM stock is
essentially worthless, which we knew. But there are still a lot of
workers there.

The thing is, we have a mechanism. Bankruptcy, Chapter 11. The
problem is that the mechanism won't work in this case. That's been
hashed over many, many times. The financial markets are still in
disarray, so the kind of special financing that firms in bankruptcy
get still won't be available unless the government stands behind it,
and people won't buy durable goods -- automobiles -- from a company
that they think has got only a few months to live.

So if you're going to do anything, you're going to have to have
some kind of packaged bankruptcy that has a lot more English on the
ball from the federal government than normal. That's what's happening
here. This is not seizing the commanding heights. This is trying to
sort of make bankruptcy work. Even odds that anything survives five
years from now, but that seems like an option we're taking.

STEPHANOPOULOS: And even odds, let's dig into that a little bit
more. The federal government drove a fairly hard bargain, we believe,
with GM. The overall labor costs are down to about the prevailing
labor costs in other parts of the industry. They've cut the number of
brands down from eight to four. What will it take for GM to be a
viable company in two years, as this plan envisions?

KRUGMAN: Well, first, auto sales have to come back up, which
they probably will. Even if the economy has only a weak recovery,
which is what most of us expect, the fact is, people are buying very
few cars right now. At current takes, it would take something like 20
years...